Caution urged over foreign FTSE influx

The flood of foreign companies to the London stock market risks undermining Britain's reputation for effective financial regulation, according to Britain's leading investors. And they are lobbying the Financial Services Authority over the dangers of what they see as a 'dilution of quality' among quoted companies.

The number of foreign companies seeking a UK listing has soared over the last two years. 'There is a blurring of what a British company is,' said Robert Talbut, chief investment officer of Royal London Asset Management.

He said that the London Stock Exchange's determination to encourage companies to list here was now a 'public policy issue' that the FSA should be aware of. 'Institutional investors are telling [the FSA] that they are presiding over a diminution in quality that could damage the reputation of London and it as a regulator.'

There is concern among the large pension and insurance companies that the FSA has already decided not to require disclosure of holdings of derivatives, contracts for difference and other instruments commonly used by investment banks to build stakes in companies, because the banks do not want it.